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NIH Launches Program to Facilitate Drug, Vaccine and Therapeutic License Agreements for Start-Up Companies

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As part of this effort, the NIH is reducing both the costs and paperwork requirements for start-up companies to obtain an exclusive option agreement to license the extensive patent portfolio developed by intramural research laboratories at both NIH and the U.S. Food and Drug Administration. The project is part of President Obama’s Startup America Initiative.

"By making it much easier for startup companies to obtain license agreements for these new technologies, we can facilitate the transfer of research advances from bench to bedside. This is where the interventions can ultimately benefit patients," said Dr. Collins.

The new start-up license agreements have been developed the Office of Technology Transfer (OTT) at NIH. Companies that are less than five years old, have fewer than 50 employees and received investment of less than $5 million are eligible to use the new, short-term exclusive Start-Up Evaluation License Agreement and the new Start-Up Commercial License Agreement.

"By obtaining access to such inventions, a start-up company may be able to attract additional investments to develop the NIH and FDA inventions into marketable products," said Mark Rohrbaugh, Ph.D., J.D., OTT director.

Starting on Oct. 1, biomedical entrepreneurs will be able to apply for any of the available patents and patent applications relating to drugs, vaccines or therapeutics in the NIH/FDA portfolio by submitting a business plan for how they propose to use them. With this program, a start-up evaluation license can be obtained for $2,000 which may be converted into an exclusive Start-up Commercial License Agreement within one year. In the Start-up Commercial License Agreement, typical royalty payments are deferred for three years or until the company experiences a liquidity event. Prior patent expenses for the license technology and one-half of new patent expenses are also similarly deferred. Performance milestones are required in these agreements but do not trigger royalty obligations. Royalty payments on product sales are limited to 1.5 percent of sales.